Minister, GMC in battle of nerves over alleged $356m tax evasion

Minister, GMC in battle of nerves over alleged $356m tax evasion

The General Secretary of the Professional and Managerial Staff Union (PMSU), Nana Oppong Owusu, has lashed out at the government for closing down Ghana Manganese Company (GMC) over alleged tax evasion.

According to him, the government could have sat down with management of the mining company to resolve the issue at stake, instead of ordering the closure of the mine, which employs 1,500 workers.

Addressing a staff durbar at Nsuta and a follow up interview with The Chronicle, Nana Oppong Owusu said the audit report, which the Minister for Land and Natural Resources, Asumah Cheremeh, based his decision to close the mine on, was one sided and that the input of the GMC was not sought, let alone, making the report available for them to respond to.

At a news conference in Accra to announce the closure of the mine, Cheremeh said the country had lost “$79 million in corporate taxes and $12.8 million in royalties due and $6.1 million in dividends. Additionally, revenue offshore for the period 2010 also amounted to $259 million. The estimated losses were based on a fair pricing model, utilising best business practices, open data, as well as information obtained from verifiable business intelligence centers.”

According to Nana Oppong, though management of GMC had complied with the order by sending the entire workforce home, it does not mean they are guilty of the accusation leveled against them, saying the government even owed them $20 million in Valued Added Tax (VAT) returns. Meanwhile, management of GMC has responded to the Minister’s order for the closure of the company over the alleged tax evasion.

Below is the unedited GMC press statement

This press release has been necessitated by the press conference held by the Minister of Lands and Natural Resources on the 5th of August 2019, on a supposedly preliminary audit report on Ghana Manganese Company. We wish to state that our inputs were not sought on the findings of this report before the sector Minister went to the press. As we are not privy to the detailed audit findings, we will not be in a position to discredit or uphold the information which was put out there by the Minister. What we intend to do by this statement is to also put in the public domain the information we have in our possession.

Yes, indeed, early this year, the Ministry of Lands and Natural Resources asked a company by name ISC Securities to audit the financial and operational affairs of GMC. ISC Securities, as we were made aware, is an Israeli company. Two gentlemen, who were both South African nationals working for ISC Securities, visited our Nsuta Mine for a day to interview some of the senior management, and also requested for information. After they had left the mine, they continued to ask for information which was provided.

We have to put on record that the background and track record of this company and the two gentlemen were not known to us, but we know that tax, unlike other disciplines, is more jurisdictional, and Ghana, as a country, has its own tax laws and system. Act 896, which is the act governing tax administration in Ghana, clearly states in section 139 that the Commissioner-General of GRA is the sole administrator of tax in this country, and we, as a company, over the years has been compliant with all tax audits conducted by GRA. In December 2018, the GRA did a transfer pricing audit on GMC for the period 2013 to 2018 to ascertain loss of revenue to the government.

The report stated that between January 2013 and June 2017, the price at which the ore was sold was at arm’s length, and, therefore, no revenue was lost to the government. GRA, however, adjusted the ore price between the G.M.C. period of July 2017 to December 2018, which resulted in additional tax (corporation tax and royalties) of US$14,063,202.77. This amount has since been paid to the government. As a matter of fact, the price the ore is sold is now determined by GRA, and we, as a company, has little or no say in the fixing of this price.

The figures put out there by the Minister in his press conference are, therefore, inconsistent with that of GRA, which is the mandated institution when it comes to tax issues in this country. GMC takes its tax obligation seriously, and last year, we won the prestigious GRA Bronze Award for tax compliance. In 2018, the corporation tax liability of the company was US$ 31 million, which was settled before 31st December 2018, as required by the law.

In relation to royalties, the company paid an amount of US$ 17 million in 2018. As at the time of this press release, all our tax obligations were up to date with the GRA. As a matter of fact, we are still waiting for an amount of $20 million in VAT refunds due to us from GRA, between the periods of December 2018 and June 2019. The records are there for everyone to check at GRA. The volumes we have shipped through the ports are also available with GPHA, and we are not in a position to alter these figures to the disadvantage of the government. The Minister also made mention of our indebtedness to other our suppliers.

This we found very unfortunate, as this is a purely commercial matter between two legal entities. As good corporate citizens, we have continually engaged these vendors when we are unable to meet our side of the agreement, especially paying them on the due dates. We know the fear and panic this press conference have caused among our various stakeholders. We wish to assure our stakeholders, especially the over 1,500 employees whose livelihood depend on this company, to be rest assured that the company is resolute and law-abiding. We will cooperate with the mandated government institutions to bring this issue to an amicable end.




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